As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Click to email CW8888 or Email ID : jacobng1@gmail.com



Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Saturday, 31 December 2011

Dreaming of financial independence by 55!

2011 is an important year for Createwealth8888. Why?

Read? Four Financial Progressive Stages

It was many years back .....

One day, after reading the book on "Rich Dad Poor Dad" by Robert, I began to like the idea of passive income, financial freedom and getting out of rat race so much that I have a mind flip. I began dreaming of financial independence by 55 and keep dreaming till this day.



(Another book that helped me is "Think and Grow Rich" ) Read? Two Books That Change My Views

But, how to achieve this wonderful dream?

Business or Investment?

For me, the choice is quite obvious. Without much talent for Business; I would have to take the Investment path to financial independence. Next, I would have to decide whether properties or stocks? I decided on stocks as I believe stocks are easier to execute.

Read? Why you must not stop dreaming of reaching financial freedom and pursue it?


Why we must get out of rat race as early as possible? Read? Regret of the Dying


Why 55?  When I began that dream, Singapore's official retirement age was 60; but now, it is 65. Too bad folks! We will have to work longer. 60 is the new 55.

Actually, when I have this dream I have already achieved financial security so financial independence is just the next step and leaded me to this simplistic thinking. If I put in enough time and effort to educate myself to become savvy with long-term investing and short-term trading; I will be able to create wealth from the stock market. (This is how I named the title of this blog. This is why I am still blogging since 2006).







I started reading many finance and investment books that I could find in NLB libraries. I also started to follow closely many investment and trading blogs, forums, cboxes closely and to identify who were the experts and gurus and hoping to learn more tips and tricks from them. (But, unfortunately, some of my superheroes were killed in 2008/2009. Read? Following My Superheroes!)

I also attended many investment and trading previews to hear from Gurus themselves; but all of them have failed to convince me to part my hard earned money to attend their so-called easy money making programmes. May be I was too stingy!

Setting Goals

It was only after a few years in the stock market, I realised that I must get real and set concrete goals to achieve this dream. I then set progressive yearly investment goals to be achieved from 2003 to 2011. This is how the investment marathon race for 2003 to 2011 has started. Basically, it is living part of my life in financial news and market and riding the emotional roller coaster ride up and down with the market.















2011 is an important year for Createwealth8888

Announcing final result

It is like students and parents waiting for the announcement of PSLE, GCE 'O' and 'A" level result.

The final result for 2003 - 2011 is as follows:



OMG! I missed the end goal!

I only achieved only 58.6%.

The reason for not achieving 2011 goal is so obvious! Look at the Red arrow in the above chart.

Sianz!!!

Financial Independence by 55

Lagi sianz .............















Look at the plunge in 2008 bear. Just a few moments of foolishness and greediness in me to bet much bigger in 2008 and the dream never come true!!!

I have to dream once again till 2015.

My net worth as on 30 Dec 2011




My net worth as on 30 Dec 2011 market closing price.

  1. Capital already invested in stocks and subjected to market volatility = 5% of net worth.
  2. Capital not invested yet and available as cash on hand = 20% of net worth.
  3. 30% of net worth comes from net profits from stocks and re-invested back into stocks and subjected to daily market volatility.
  4. 45% of net worth are assets not affected by market volatility.
Volatility is name of the Game


How bad will the next bear hit my portfolio?

My stress test result on my portfolio indicated that it may not be as bad as compared to 2008 Bear.

I am better prepared for the next bear this time than in 2007. Now, I will have far more bullets to take on the bear. See the chart below:


 


In 2007, I have too much capital invested in stocks and too little bullets.
In 2008, I have too little bullets to recover.
In 2012, I think I am quite balance with stocks and bullets.

Track, Measure and Visualise!

It is very important that we can visualise our portfolio performance and know how are we doing?

Can we reach our goals with the current investing strategies?

Know our XIRR!


  1. XIRR since one year ago = -2.5% (negative growth)
  2. XIRR since 3 years ago = +10.0%
  3. XIRR since 9 years ago = +11.0%
  4. XIRR since 12 years ago = +9.3%
2011 is a very difficult year with my current investing strategy. It has failed so badly. I will go to Batam in the New Year 2012 to think over it.

I never have so much cash for investing!

2011 is even more important year for me when I unlocked my Division of Commandos in my CPF OA to battle the next bear; but it can be a double-edged sword too. I can lose big.

Setting the new goals









The next 10 years of progressive goals (2012 to 2021)







 
I have been tracking my annual expenses since 2000. The next 10 years of progressive goals are inflation adjusted at 3% rate based on this formula to compute the likelihood annual expenses to determine the amount required in retirement.
 
Likelihood Annual Expenses =
 
(Max Expense since 2000 + 4 x Avg Expenses since 2000 + Minimum Expense since 2000) / 6
 
 
 
 
 

The Money tree has grown and is bearing fruits

Sometime in life, we will reap what we have sowed. I will be reaping what I have sowed. Read? One click! That is more than enough to generate passive income for a long time.

These fruits will ease my future goals.

I hope to sow more One Click in the next bear.

I realized that passive income from stock dividends is fantastic once you got damn right. You don't even need to lift a finger to receive it. Really wonderful!






How will I end the next race in 2021?
















Will I have the wisdom not to repeat the same few moments of foolishness and greediness in me?




















5 comments:

  1. Very clear and defined goals! Really envy you on your financial stage you are in now and with the bullets you have..Wishing you to hit your goals soon !

    ReplyDelete
  2. Hi CW,
    i have been doing this so called "Life Cycle" investing since day one. Some cycles i did O. K.;some i did better. This current cycle of "2007-Now" shows i am losing 15K (absolute loss for 2011). i would have done much better if i did not lose 30k speculating in S CHIPS this year. Owch! Now i really understand WB:
    1) Rule NO. 1 do not lose money.
    2) Rule No. 2 refer to rule No. 1

    i understand you have been investing for about ten years only. And you are about 55 years now.
    With your diligence, persistence and most important passion, you will definitely be financially free sooner than later. i think you are doing very great because some of your "bullets" have to be diverted to protect your children instead of using in the market. Respect.
    Cheers & shalom.

    Wishing you & family a "PROPEROUS & HAPPY NEW YEAR"

    ReplyDelete
  3. Yeah. Some of us are too focus on winning and forgetting to constantly reminding ourselves that preventing losing is the key to investment success.

    One of Chinese's sayings is true: "Lose until siao!". Once our losses breach a certain threshold, we may lose a few moments of control of our mind and bet even bigger to try to win it back all.

    ReplyDelete
  4. Wow! Qian bei, this post is like Lord of the Rings - one ring to rule them all :)

    No plans go in a straight line - except those used by gurus and financial advisers that our investment returns will be 8% in a straight line times 20 or 30 years. Yeah right! There will be ups and downs - like in 2008 when you had a stumble. Inspirational on how you came storming back! It's how we behave and act when we stumble that matters!

    Biosensors and Keppel? This shows you are not a one pony investor. LOL! Investing in Biosensors and Keppel require the patience of a fisherman - which you have ;)

    All the best qian bei! Especially with your Division of Commandos!!!

    I've only got a battalion; but still better than nothing!

    HDB heartlander boleh too!

    ReplyDelete
  5. Hi SMOL,

    Welcome back to Singapore Boleh!

    ReplyDelete

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